And so that’s why we kind of gave the outlook that it’s going to be a tough couple of quarters for Farnell as that business gets through the inventory we feel decent that margin levels have stabilized, but unfortunately, they’re a little lower than we had anticipated. And the cost actions are going to take a little time as well. So that’s why we kind of signaled it’s going to be perhaps more of the same for the next couple of quarters with Farnell with opportunity to kind of uplift that margin modestly over the — as we ended the year. Talking about the EC business, what I would say is I think implied in the guidance, which I talked about a little bit is normally, we would get a seasonal uplift in the West, right? So we get a robust shift in business from Asia to the West, which helps on the margin.
We’re still seeing some of that, but because the West is expected to be down in the March quarter versus typically up, we’re not getting the uplift that we normally would see there with a favorable mix. And so what I would say is, hey, we’re kind of at the revenue levels, right, to kind of maintain that. But typically, we’re not going to get into the fourth quarter. But typically, you see Asia rebound a little bit coming off the Lunar New Year. So that would be typically what would happen in the fourth quarter, as you’d see Asia up a little bit from whatever they do in the March quarter. But with that being said, we’re continuing to drive it. And as Phil noted, we’re going to control expenses. And we’re going to continue to work on that core inventory, and we wanted to go from stable to down where that inventory is elevated, the team is working on it.
And so we’re going to focus on the cash flow and getting the inventory down. And try to compete well in the market where we have opportunities. We’re still seeing some opportunities out there, but it’s definitely more challenging than it was 9 days ago.
Ruplu Bhattacharya: Okay. Let me just sneak one more in. You mentioned expenses. Maybe both for you and Phil. Phil, I think you said you’re making investments in the sales force? I mean you talked about demand creation and IP&E and embedded. So I guess my question is, do you need to invest in more sales force to train them or to hire more people. At the same time, you’re doing restructuring in Farnell. So I mean if you can reason like what your expectation is for OpEx as a percent of gross profit going forward and the type of investments you see happening over the next couple of quarters?
Phil Gallagher: Yes, you got it Ruplu. I’ll let Ken answer that net of ease in that GP. Look, we’ve been managing our expenses. I mean we have not increased our expenses as a percent. And we’ve been actually — I always say that, yes, we’re always reducing expenses while we need to make investments. And some investments might be in productivity tools, RPAs, things on those lines now artificial intelligence/machine learning. So we’re putting more and more investment behind the, I’ll call it, the digital side of the equation. As far as sales force, our field application engineers, our design solutions and yes, we mentioned embedded. We’re well staffed there. We’ve invested there appropriately. We are not removing investments in that space that drives the growth and the profitability of the company.
So there’s no movement of foot in the core to adjust anything in those areas. And we’ve articulated clearly, we’ll come back more on the Farnell restructuring is separate as Ken pointed out. Ken, on net GP.
Ken Jacobson: Yes. I mean I think sales are coming down Obviously, Ruplu implied in the March guidance that the OE to GP is going to be impacted accordingly in terms of percentage. But I would just think about it as kind of flattish. I mean, where we are making investments, we’re trying to self-fund we are focused on expense discipline. So what I would say is we’re kind of more of the same outside of Farnell, but depending on our view of how long the demand softness may look at, we might have to take a harder look at more expense actions. But again, anything we do there, we’re going to protect for the medium term and long term and really focus on the opportunities we see out beyond the horizon of where the demand is soft.
Operator: Our next question is from Joe Quatrochi with Wells Fargo.
Joe Quatrochi: A couple if I could. Maybe just kind of first sticking with the Farnell. The cost restructuring that you’re putting in place, do we think about that $50 million to $70 million is flowing to the bottom line for the total kind of company P&L? Or are there areas that maybe there’s a little bit of offset from a cost perspective just as we’re thinking about OpEx?
Ken Jacobson: Yes. I think first thing I’d say is it’s an annual amount, and I think there are other factors to consider. So I’d say I don’t know that I would be a direct one for one. It depends on volume and other things. But I think from a Farnell perspective, right, I think that you can kind of start to build that in to the operating margin as we exit the year.
Joe Quatrochi: And I assume you meant fiscal year. And then just as a follow-up to that. Maybe just kind of trying to understand what’s changed from 90 days ago and just understanding maybe it’s the kind of the mix of demand of the areas that are starting to maybe see incremental weakness I guess, how do I think about just your exposure, the mix exposure of, say, industrial to like Western regions relative to Asia and just kind of what’s incrementally weaker relative to last quarter?
